Retirement by the Numbers - Employer Plans, IRAs, and the Saver’s Credit

Savings Opportunities Increase for Some Retirement Plans

Both IRA contribution levels and contribution limits to employer sponsored programs are subject to cost of living adjustments (COLAs). IRA contribution levels remained the same from 2021 to 2022.

The allowable adjusted gross income (AGI) parameters for IRAs increased for 2022. Income thresholds for 2022 also increased under the Retirement Savings Contributions Credit, commonly known as the Saver's Credit, which is a nonrefundable tax credit that allows lower and middle income retirement plan participants to use elective contributions to reduce their federal income tax.

Employer-Sponsored Programs

IRAs***

Retirement Savings Contributions Credit****

*Subject to COLAs.

**SARSEPs must have been established prior to January 1, 1997. The maximum contribution and catch-up amounts are the same as for 401(k), 457 and 403(b) plans.

***Individuals have generally until the tax filing deadline (April 18. 2022) to make contributions to their IRAs for 2021.

****Depending on AGI, the Retirement Savings Contribution Credit, commonly referred to as the Saver's Credit, provides a credit ranging from 10% to 50% with lower income taxpayers being eligible for a higher credit. For example, a married taxpayer filing jointly with an AGI of less than $41,000 making a $2,000 retirement plan contribution in 2022 could be eligible for a 50% credit, or $1,000. By contrast, if that same taxpayer had an AGI between $41,001 and $44,000, would be eligible for a 20% credit, or $400; an AGI between $44,001 and $68,000 would make that same taxpayer eligible for a 10% credit, or $200.

Source: Wolters Kluwer CCH® AnswerConnect, 2022
Permission for use granted.